Courts will not lightly overturn decisions of administrators. This is judicial deference. But deference gives way to irrationality.
An irrational decision will be set aside, even if the court finds that it does not have the expertise to make the decision itself. In that case, the decision is remitted back to the decision-maker to decide the issue again, based on correct procedure and rational deliberation.
The decision of the National Energy Regulator of South Africa (Nersa) to grant Eskom an effective 9.4% increase of electricity tariffs for 2016 was set aside because the prescribed method (the Multi-Year Price Determination Methodology or MYPD) was not followed and this deviation from procedure was found to be irrational.
For example, in making its decision, Nersa irrationally took into consideration a decrease in revenue where Eskom actively encouraged consumers not to use electricity. Nersa also did not apply the MYPD benchmark on efficiency either by not testing it, or by testing it irrationally, and did not consider quarterly reports as prescribed.
Nersa was not found to be incompetent, but the decision was set aside because Nersa deviated from its own prescribed methods, and did not allow the public to deal with the deviation in public hearings and submissions.
Judicial deference to administrative decision-makers is particularly appropriate when the decision is very technical or of a kind in which a court has no particular proficency. The Promotion of Administrative Justice Act permits a court to substitute its findings for that of the decision-maker, but only in exceptional cases.
Here the court chose not to usurp the decision-making powers of Nersa. The circumstances were not so exceptional that the court would substitute its own decision. Instead, it set the decision aside and sent it back to Nersa for reconsideration, in accordance with the MYPD.
The case is Borbet v Nersa.
